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Book Cover
E-book
Author Ciminelli, Gabriele

Title Employment Protection Deregulation and Labor Shares in Advanced Economies
Published Washington, D.C. : International Monetary Fund, 2018

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Description 1 online resource (73 pages)
Series IMF Working Papers
IMF Working Papers; Country Report ; no. 17/224
Contents Cover; Contents; Abstract; I. Introduction; II. Theoretical Framework; A. Competitive Labor Market; B. Bargaining Under the Right-to-Manage Model; C. Efficient Bargaining; D. Implications for the Empirical Analysis; III. Dataset; A. Employment Protection Legislation Reforms; B. Layoff Rates; C. Elasticities of Substitution; D. Labor Share and Other Data; E. Stylized Facts; IV. Econometric Framework; V. Baseline Results and Robustness Checks; A. Country-level Analysis; B. Country-industry Level Analysis; VI. Extensions; A. Channels; B. EOS Above Versus Below 1
C. Back-of-the Envelope Calculation of the Contribution of Job Protection Deregulation to the Overall Decline in Labor SharesVII. Conclusion; VIII. References; Figures; 1. Cumulative Changes in Country Labor Shares Around Reform Years; 2. Cumulative Changes in Industry Labor Shares Around Reform Years by Industry; 3. Country-level Analysis-Baseline Results; 4. Country-industry-level Analysis-Baseline Results; 5. Country-industry-level Analysis: Robustness to Excluding Individual Countries; 6. Country-industry-level Analysis: Robustness to Excluding Individual Industries; Tables
1. Country-level Analysis: Robustness Checks2. Country-industry-level Analysis: Robustness Checks on Lag Specification; 3. Country-industry-level Analysis: Robustness Checks on Sample Composition; 4. Country-industry Analysis: Robustness Checks on the Layoff Rates; 5. Country-industry Analysis: Robustness Checks on the Elasticities of Substitution; 6. Country-industry-level Analysis: Robustness Checks on Potential Omitted; 7. Country-industry-level Analysis: Extension on Labor Share Drivers; 8. Country-industry-level Analysis: Extension on Sample Split According to Elasticity of; Appendixes
1. Dataset of Reforms2. Layoff rates; 3. Elasticities of Substitution; 4. Summary Statistics of Industry Data; 5. Stylized Facts; 6. Back-to-the-envelope Calculation Using Country-industry-level Estimates
Summary Labor market deregulation, intended to boost productivity and employment, is one plausible, yet little studied, driver of the decline in labor shares that took place across most advanced economies since the early 1990s. This paper assesses the impact of job protection deregulation in a sample of 26 advanced economies over the period 1970-2015, using a newly constructed dataset of major reforms to employment protection legislation for regular contracts. We apply the local projection method to estimate the dynamic response of the labor share to our reform events at both the country and the country-industry levels. For the latter, we employ a differences-in-differences identification strategy using two identifying assumptions grounded in theory-namely that job protection deregulation should have larger negative effects in industries characterized by (i) a higher 'natural' propensity to adjust the workforce, and (ii) a lower elasticity of substitution between capital and labor. We find a statistically significant, economically large and robust negative effect of deregulation on the labor share. In particular, illustrative back-of-the-envelope calculations suggest that job protection deregulation may have contributed about 15 percent to the average labor share decline in advanced economies. Together with existing evidence regarding the macroeconomic gains from job protection and other labor market reforms, our results also point to the need for policymakers to address efficiency-equity trade-offs when designing such reforms
Notes Print version record
Subject Business cycles.
Economic stabilization.
Business cycles
Economic stabilization
Business Fluctuations.
Labor Force And Employment, Size, And Structure.
Plant Closings.
Structural Reforms.
Form Electronic book
Author Duval, Romain A
Furceri, Davide
ISBN 9781484373743
148437374X
148436743X
9781484367438